Disney CEO Bob Igergave amea culpafor big losses incurred while launching streaming platforms like Disney+ during an investor conference appearance on Wednesday.
As we got into the streaming business in a very, very aggressive way, we tried to tell too many stories. Basically we invested too much, way ahead of possible returns. Its what led to streaming ending up as a $4 billion loss, Iger told the MoffettNathanson Media, Internet Communications Conference during a session that was webcast.
Iger addressed a falling out with his hand-picked successor, former Disney CEO Bob Chapek, whose tenure he called out for lavish and misplaced content spending. It was clear to me that our structure was not working, because we were removing accountability from those that were basically investing the most capital was a mistake, he argued. Iger said Chapek had moved the PL (profit and losses) responsibility to the studios distribution arm, a move he reversed on his return as CEO in 2022. When I came back, it was clear to me that that structure was not working, because removing accountability from those that were basically investing the most capital was a mistake, he argued.
The result of spending more on content than could be turned to profit resulted in volume and not quality, which turned out to be a mistake, Iger added. The Disney boss conceded volume was required to win the streaming wars against rivals like Netflix and Prime Video.
But he added: Theres a very fine line that you can cross and get in trouble if your volume ends up diluting managements attention to what is being made is right. And thats what happened to us. So I have pulled that back, Iger told the conference.
As part of his turnaround plan for Disney, Iger said he reinstalled a link between the creative and monetization sides of the studio to basically help guide what was being made, when it was being made and where, meaning internationally.
He reiterated his respect for rival Netflix for being able to engage users with appealing content. Ive been telling everybody good isnt good enough. It has to be great. Just keep driving that, but if you force them to make too much, then that becomes almost impossible to do, Iger added, returning to the thorny question of balancing volume with quality.
To drive engagement, Igers evolving streaming strategy has included bundling Disney+ with Hulu. I wont get into too many details there, but if you are a Disney+ subscriber, for an extra $2 you can get Hulu ad-supported The combination of those two is an engagement play more than anything else, Iger said.
He added bundling Disney+,Hulu, and ESPN+ to get all three streaming services together potentially can increase engagement to an extraordinary level. Iger also addressed his 2022 statement made when he was no longer Disney CEO, but about to return to replace Chapek, that traditional TV was marching to a distinctprecipice, and its going to be pushed off.
That was followed by Iger when back at the Disney helm announcing he was looking at all options, including a possiblesaleofABC, ESPN and its linear TV assets. He has since revised his strategic thinking around Disneys linear TV assets, he told the investors conference, and now sees them as part of a wider slate of assets to engage consumers.
When I came back, I did declare everything was on the table, Iger recalled of a root and branch look at the studios asset base. And I looked very expansively at traditional media. Ultimately I concluded and I know I mentioned the word portfolio where its not going to be a growth business, but it could become an important component to our ability to basically engage with the consumer, Iger argued.
Along with that strategy, Disney had reduced its content spend for traditional TV networks, invested in some and then managed them seamlessly with streaming platforms, whether thats ABC or Hulu. So you have the same executives managing both, and their goal is to drive basically bottom line growth and success, Iger argued.